Income Tax: You do not have to pay any tax on scholarships

Published: December 19, 2018 12:05:30 AM

Any kind of scholarship granted to a person to meet the cost of education is exempted from tax under Section 10(16) of Income Tax Act. If your daughter gets scholarship for the purpose of meeting cost of education, then it is not taxable.

You do not have to pay any tax on scholarships

By Chirag Nangia

My daughter is in second year at IIT and gets Rs 15,000 government scholarship every month and `1.5 lakh lump sum yearly scholarship from an NGO. Does she have to pay any tax on both the scholarships?
– Angad Soin
Any kind of scholarship granted to a person to meet the cost of education is exempted from tax under Section 10(16) of Income Tax Act. If your daughter gets scholarship for the purpose of meeting cost of education, then it is not taxable.

Can an Indian resident whose name has been added in his son/daughter’s NRO account have the same powers to operate the account?
—Dilip Saxena
The NRO account holder can execute a power of attorney in favour of a resident in order to carry out the account operations. The powers are limited to make all local payments and remitting funds outside India of only the income earned in India. NRO account can be opened jointly with resident relative only on former or survivor basis which means such resident relative cannot operate the account during the lifetime of non-resident account holder.

I have received Rs 81,000 as pension arrears of last 17 years – Rs 36,000 as arrear and `45,000 as simple interest @ 9%. What will be tax treatment for the interest portion as it is paid as penalty on order of Supreme Court?
—K Mukherjee
Interest awarded by the courts (as a penalty) shall be taxed as income from other sources. This position is supported by judicial precedents in this regard.
Also, the interest paid by the income-tax department on the income-tax refund is chargeable to tax. This position is also a settled position by judicial precedents.

I get interest from bank fixed deposits and also have monthly pension of `1800 as per the EPS 95. Can I claim standard deduction of `40,000?
—S Gangadharan
Standard deduction of `40,000 can be claimed even if a taxpayer receives only pension. However, amount of standard deduction is restricted to salary income if it is lower than standard deduction. As your total salary income, `21,600 (1800 x 12), is less than `40,000, you can claim deduction of `21,600 only.

The writer is director, Nangia Advisors LLP. Send your queries to fepersonalfinance@expressindia.com

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